PETITIONER:
THE NEW INDIA ASSURANCE CO. LTD.,
Vs.
RESPONDENT:
SMT. SHEELA RANI & ORS.
DATE OF JUDGMENT: 15/09/1998
BENCH:
K. VENKATASWAMI, & A.P. MISRA.
ACT
HEADNOTE
JUDGMENT
JUDGMENT
Venkataswami. J. This appeal arises out of a judgment dated 8.4.87 of the Division Bench of the Rajasthan High Court in D.B. Civil Special Appeal No.29 of 1987. Brief facts respondent herein was the owner of a fiat Car bearing Registration No. RSM-9701. The said Car was insured with the appellant-Insurance Company for the period 16.6.76 to 5.6.77. It appears that the sixth respondent sold the car to the fourth respondent on 18.6.76. This transfer was accepted on 24.6.76 by the Regional Transport Authority, Jaipur. The said Car met with an accident on 10.5.77 in which one Moti Lal Jain, husband of the first respondent, died. A Claim Petition was filed before the Motor Accident Claims Tribunal, Jaipur, in M.A.C. No. 291/77 by the first and second respondents, widow and minor son of the deceased, respectively. The third respondent, mother of the deceased, was shown as respondent later on transposed as claimant in the Claim Petition. We are not concerned with the quantum of compensation in this appeal as the sole issue raised by the appellant Insurance Company was with reference to its liability. In other words, according to the appellant, the transfer of the car by the sixth respondent to fourth respondent was not informed to it by the sixth respondent (transfer or) as required under Section 103-A of the Motor Vehicles Act, 1939 (hereinafter called the ’Act’) and, therefore, the accident having taken place subsequent to the transfer, the appellant-Insurance Company cannot be held liable. All the Courts below, namely, the Tribunal, a learned Single Judge as also the Division Bench of the High Court have rejected such a contention holding that the appellant-Insurance Company was liable to pay the compensation. It is not in dispute that the fourth respondent (transferee) vide letters dated 23.6.76 and 30.6.76 had informed the appellant about the transfer of the Car, to which there was no reply from the appellant. the contention raised on behalf of the appellant before the Tribunal and the High Court as well as in this Court was to the effect that the intimation about the transfer by the transferee was not in accordance with the prescribed form and, therefore, it was not taken note of by the appellant-Insurance Company. Though, it was contended before the Tribunal and the High Court that no such letters said to have been sent under Certificate of Posting, were received by the High Court, we cannot allow such contention to be raised in this Court. In coming to the conclusion that in the absence of proper intimation about the transfer by the transferor in the prescribed form, the Policy will not lapse, the learned Single Judge of the High Court placed reliance on a judgment of the Full Bench of the Andhra Pradesh High Court in Madineni Kondaiah & Ors. Vs. Yaseen Fatima & Ors. reported in AIR 1986 A.P. 62. Applying the principles laid down in the said judgment, the learned Single Judge rejected the contention of the Insurance Company that it was not liable on the facts of this case. The Division Bench also rejected a similar contention and affirmed the view taken by the learned Single Judge after referring to some more cases. Learned counsel appearing for the appellant-Insurance Company reiterating the same contention, namely, that the appellant was not liable to pay the compensation in the absence of valid transfer of the Policy in favour of the transferee, invited our attention to a recent judgment of this Court in Complete Insulations (p) Ltd. Vs. New India Assurance Co. Ltd. [(1996) 1 SCC 221]. After carefully going through the facts and the ratio of the said judgment this Court has approved the ratio laid down in thee decision of the Full Bench of the Andhra Pradesh High Court in Kondaiah’s case. The fact in Complete Insulations’s case are more or less identical to the case on hand. In that case, a transfer took place on 15.6.89. It was the transferee, who informed on 26.6.89 about the transfer of registration and asked for transfer of the Insurance Policy. A reminder was also sent on 24.7.89. The Insurance Company in that case did not respond to the said letters. The transferee preferred a complaint before the Consumer Disputes Redressal Commission, Chandigarh, claiming compensation for the damage caused to the Car. The commission, overruling the objection of the Insurance Company, awarded a sum of Rs. 83,000/- On appeal by the Insurance Company, the National Consumer Disputes Redressal Commission set aside the order of the Commission at Chandigarh and dismissed the complaint. The transferee preferred an appeal to this Court. While affirming the decision of the National Commission, this Court elaborately considered the nature of a claim by a third party. It was held that the defence available to the Insurance Company against the claim of the transferee in the absence of proper transfer of policy regarding the damage to own vehicle or injury to self will not be available to a claim by a third party. This Court also compared the relevant provisions of the old Act Section 103-A with Section 157 of the 1988 Act. After comparing the relevant provisions, as noticed above, this Court held as follows:-
"In Kondaiah case the vehicle in question was
transferred but not the insurance policy. The
policy or the certificate was not transferred to the
vendee. The victims of the accident filed a claim
before the Motor Accident Claims Tribunal. Broadly
four contentions were considered, namely, (i)
whether the transfer of the vehicle to the purchaser
is not complete till the vehicle is registered in
the name of the transferee (ii) whether on transfer
in the absence of the transfer of the insurance
policy, the policy lapses (iii) whether it lapses
even against the third party (iv) whether the
insurance company can validly contend that the
insurance policy had lapsed. The Full Bench held
that under the sale of Goods Act the sale is
complete on payment of the consideration and
delivery of the vehicle, regardless of transfer of
registration in the name of the transferee. On the
second and third contentions it was held that
notwithstanding the non-transfer of the insurance
policy, the liability qua third party subsists in
view of sections 94 and 95 of the old Act. The last
point regarding right of insurance company to raise
the plea of the policy having lapsed is not of any
relevance to us. In the separate judgment of
Kodandaramayya, J. relied upon by the National
Commission, it was pointed out that the "third
party" referred to in section 95 did not include a
transferee who was not a party to the original
contract of insurance and, therefore, the transferee
or vendee could not claim any benefit from the
insurance company for damage to his person or the
vehicle.
The New Act came into force with effect from
1.7.1989. Since the Vehicle in question was sold on
15.6.1989 and the letter of intimation of transfer
and request to transfer the Certificate of Insurance
and the policy described therein was sent on
26.6.1989, the old Act applied. Admittedly the
request was not refused under section 103-A of the
old Act till the new Act came into force.
Thereafter on 24.7.1989 the Insurance Company was
once again requested to effect the transfer of the
Certificate of Insurance as well as the policy but
to no avail. By that day the new Act had come into
force. Actually the application dated 26.6.1989 was
pending when the new Act had come into force. That
application had to be processed under Section 157 of
the new Act and hence the certificate as well as the
policy must be deemed to have been transferred in
the name of the transferee. Even if it is assumed
that the old Act applied to pending cases the
certificate and policy must be deemed to have been
transferred since no refusal was communicated by the
Insurance Company to the transferor or the
transferee. Therefore, in either case the transfer
of the Certificate of Insurance and policy described
therein must be taken as complete in view of the
language of Section 103-A of the old Act and Section
157 of the new Act.
Section 157 appears in Chapter XI entitled
"Insurance of Motor Vehicles against Third Party
Risks" and comprises Sections 145 to 164. Section
145 defines certain expression used in the various
provisions of that chapter. The expression
"certificate of Insurance" means a certificate
issued by the authorised insurer under Section
147(3). "Policy of Insurance" includes a
certificate of insurance. Section 146(1) posits
that ’no person shall use. except as a passenger,
or cause or allow any other person to use, a motor
vehicle in a public place, unless there is in force
in relation to the use of the vehicle by that person
or that other person, as the case may be, a policy
of insurance complying with the requirements of this
chapter". Of course this provision does not apply
to vehicles owned by the Central or State Government
and used for Government purposes not connected with
any commercial enterprise. This provision
corresponds to Section 94 of the old Act. Section
147 provides that the policy of insurance to be
issued by the authorised insurer must insure the
specified person or classes of persons against any
liability incurred in respect of death of or bodily
injury caused to any passenger of a public service
vehicle in a public place. This provision is akin
to Section 95 of the old Act. It will be seen that
the liability extends to damage to any property of a
third party and not damage to the property of the
owner of the stipulates the extent of liability and
in the case of property of a third party the limit
of liability is Rupees six thousand only. The
proviso to that sub-section continues the liability
fixed under the policy for four months or till the
date of its actual expiry, whichever is earlier.
Sub-section (3) next provides that the policy of
insurance shall be of no effect unless and until the
insurer has issued a certificate of insurance in the
prescribed from. The next important provision which
we may notice is Section 156 which sets out the
effect of the certificate of insurance. It says
that when the insurer issues the certificate of
insurance, then even if the policy of insurance has
not as yet been if the policy of insurance has not
as yet been issued, the insurer shall, as between
himself and any other person except the insured, be
deemed to have issued to the insured a policy of
insurance conforming in all respects with the
description and particulars stated in the
certificate. It is obvious on a plain reading of
this provision that the legislature was anxious to
protect third party interest. Then comes Section
157 which we have extracted comes Section 157 which
we have extracted earlier. This provision lays down
that when the owner of the vehicle in relation
whereto a certificate of insurance is issued
transfers to another person the ownership of the
motor vehicle, the certificate of insurance together
with the policy described therein shall be deemed to
have been transferred in favour of the new owner of
the vehicle with effect from the date of transfer.
Sub-section (2) requires the transferee to apply
within fourteen days from the date of transfer to
the insurer for making necessary changes in the
certificate of insurance and the policy described
therein in his favour. These are the relevant
provisions of chapter XI which have a bearing on the
question of insurer’s liability in the present case.
There can be no doubt that the said chapter
provides for compulsory insurance of vehicles to
cover third-party risks. Section 146 forbids the
use of a vehicle in a public place unless there is
in "orce in relation to the use of the vehicle a
policy of insurance complying with the requirements
of that chapter. Any breach of this provision may
attract penal action. In the case of property, the
coverage extends to property of a third party i.e.
a person other than the insured. This is clear from
Section 147(1)(b)(i) which clearly refers to "damage
to any property of a third party" and not damage to
the property of the ’insured’ himself. And the
limit of liability fixed for damage to property of a
third party is Rupees six thousand only as pointed
out earlier. That is why even the Claims Tribunal
constituted under Section 165 is invested with
jurisdiction to adjudicate upon claims for
compensation in respect of accidents involving death
of or bodily injury to persons arising out of the
use of motor vehicles, or damage to any property of
a third party so arising, or both. Here also it is
restricted to damage to third-party property and not
the property of the insured. Thus, the entire
Chapter XI of the new Act concerns third-party risks
only. It is therefore, obvious that insurance is
compulsory only in respect of third party risks
since Section 146 prohibits the use of a motor
vehicle in a public place unless there is in
relation thereto a policy of insurance complying
with the requirements of chapter XI. Thus, the
requirements of that chapter are in relation to
third-party risks only and hence the fiction of
Section 157 of the new Act must be limited thereto.
The certificate of insurance to be issued in the
prescribed form (see Form 51 prescribed under Rule
141 of the Central Motor Vehicles Rules, 1989) must.
therefore, relate to third party risks. Since the
provisions under the New Act and the Old Act in this
behalf are substantially the same in relation to
liability in regard to third parties, the National
Consumer Disputes Redressal Commission was right in
the view it took based on the decision in Kondaiah
case because the transferee-insured could not be
said to be a third party qua the vehicle in
question. It is only in respect of third party
risks that Section 157 of the New Act provides that
the certificate of insurance together with the
policy of insurance described therein "shall be
deemed to have been transferred in favour of the
person to whom the motor vehicle is transferred".
If the policy of insurance covers other risks as
well, e.g., damage caused to the vehicle of the
insured himself, that would be a matter falling
outside Chapter Xi of the New Act and in the realm
of contract for which there must be an agreement
between the insurer and the transferee, the former
undertaking to cover the risk or damage to the
vehicle. In the present case since there was no
such agreement and since the insurer had not
transferred the policy of insurance in relation
there to the transferee, the insurer was not liable
to make good the damage to the Vehicle. The view
taken by the National Commission is therefore
correct." We are conscious that in the above judgment of this Court, the claim by the transferee was one relating to damage to the vehicle and not one relating to third party. A careful reading of the judgment of this Court, extracted as above, will clearly show that on the transfer of the vehicle about which intimation was given though not strictly as required under Section 103-A of the Act and in the absence of refusal from the insurer the Policy already given by the Insurance Company to the transferor will not lapse. As in the case of Complete Insulations (supra) in the present case also the transferee had intimated to the appellant-Insurance Company about the transfer of the vehicle in his favour though not in the absence of such reply the Certificate shall be deemed to have been transferred in favour of the transferee as per Section 103-A of the Act. In view of the above discussion, we do not find any merit in this appeal and the same is accordingly dismissed with no order as to costs.